Level 3 Communications Turns To Profit In Q4 - Quick Facts

(RTTNews) - Level 3 Communications Inc. (LVLT) reported that its fourth-quarter 2013 net income was $14 million and $0.06 per share, compared to a net loss of $56 million and $0.26 per share in the fourth quarter 2012. Analysts polled by Thomson Reuters expected the company to report earnings of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted EBITDA was $466 million in the fourth quarter 2013, which included a $10 million non-recurring, legacy Latin America non-income tax benefit.

Quarterly revenue declined to $1.602 billion from $1.614 billion in the year ago quarter. Eleven analysts estimated revenues of $1.59 billion for the quarter.

Core Network Services or CNS revenue was $1.443 billion in the fourth quarter 2013, increasing 4.1 percent year-over-year on a constant currency basis.

"We had a strong finish to 2013 as our fourth quarter revenue benefited from both underlying growth and seasonal strength," said Jeff Storey, president and CEO of Level 3. "Level 3's global network and differentiated customer experience continue to resonate with enterprises, leading to solid CNS enterprise growth of 6.8 percent for the full year 2013. We are well-positioned for improved growth in 2014."

The company said it has paid 60 percent of employee annual bonuses in stock compensation and 40 percent in cash. Beginning in 2014, the company said it will accrue the entire bonus compensation within SG&A as cash compensation. Had the company made this change in 2013, there would have been an increase in cash compensation expense within SG&A of $59 million, offset by an equal decrease in non-cash compensation expense, and Adjusted EBITDA would have been $1.565 billion, pro forma for the change.

The company expects this change will reduce the number of shares of common stock issued going forward.

For the first quarter 2014, the company expects CNS revenue to be roughly flat on a sequential basis, due to the typical reversal in seasonally strong fourth quarter revenue offset by continued underlying growth. It expects Adjusted EBITDA to be roughly flat for the first quarter 2014 compared to the $438 million in the fourth quarter 2013.

In 2014, the company looks forward to building on the strong foundation for growth in revenue, Adjusted EBITDA and free cash flow that it laid in 2013.

Overall for the full year 2014, the company expects CNS revenue growth to be higher than the 2.9 percent growth it saw for the full year 2013, on a constant currency basis.

From the starting point of $1.565 billion, pro forma for the change in cash bonus compensation, the firm expects Adjusted EBITDA to grow 11 to 14 percent for the full year 2014 compared to the full year 2013.